Prescriptions from Canada: An empty pillbox for Nevada

Earlier this month, the state Senate’s Commerce and Labor Committee debated a bill that would allow Canadian pharmacies to sell Nevadans prescription drugs. At first look, this seems to be a commendable attempt to reduce prescription drug costs, because Canadian brand-name drugs generally cost less than American ones. There are probably many Nevadans who already take advantage of the price differences and are ordering from pharmacies in Canada.

At least, they think they are ordering from Canadian pharmacies.

Because this business currently violates federal law, Nevadans who order from some so-called Canadian pharmacies have no way of knowing what they’re getting or where it’s coming from. If this bill becomes law, the state Board of Pharmacy will be able to license any Canadian-based Internet pharmacy, as long as the board in the relevant Canadian province has also licensed it. By checking a Web site set up by the state Department of Health, patients will easily learn whether a Canadian pharmacy is licensed or not.

So, is this an opportunity for the Silver State’s politicians to stand up to the pharmaceutical industry and give residents some relief from sky-high drug prices? Certainly not. In fact, this whole movement to get cheaper drugs from Canada is, at best, a distraction from serious health care reforms that will put patients’ interests first. It’s depressing that Nevada’s politicians are wasting the taxpayers’ time debating it.

Why? This month, the Canadian Health Minister, Ujjal Dosanjh, supported by the Canadian Pharmacists Association, the Canadian Medical Association and other groups, indicated that he would look at ways for the Canadian government to ban shipments of medicines through the Internet. As more states, and even the U.S. federal government, jawbone about making this trade legal, it only hastens the day when Canadians will shut it down.

The problem with this cross-border prescription traffic (which lawyers and economists call “parallel trade”) is that it has always been a win-lose situation and only sustainable for the short term. Some American patients and the Internet pharmacies win, but Canadian patients and drug companies lose. Many pharmaceutical companies are making Canadian wholesalers promise not to divert their medicines to Internet pharmacies that will ship the medicines to Americans.

It’s not easy to enforce such terms, so the pharmaceutical manufacturers have decided to restrict sales to Canadian pharmacies. Any unexplained jump in demand leads to warning lights going off in the manufacturers’ warehouses, and they stop shipping.

This is starting to cause a big problem for Canada. The Coalition for Manitoba Pharmacy, a group located in the province with the biggest concentration of Internet pharmacies, periodically reports shortages of certain medicines. Nobody can expect the Canadian government to stand by and let the Internet traders pillage the shelves of Canadian pharmacies.

Even if they were so sleepy as to allow this to happen, it wouldn’t be any good to American patients who demand medicines that often do not exist in Canada. Over the 10 years ending in 2001, the FDA approved 337 new medicines while the Canadian regulator approved 295.

What if Nevada or the United States decided to “parallel” import medicines from Ireland, Belgium, or Australia, for example? Obviously, the drug makers and the governments there would respond the same way. The problem with trying to lower prescription drug prices through parallel trade is that it relies on foreign governments and drug makers to act against their own interests, which they surely will not do.

The outrage over prescription drug prices in the United States is largely a political creation anyway. American seniors, the richest group in the history of mankind, spend 3 percent of their incomes on medicines, less than half of what they spend on entertainment. And for those truly in need, there are solutions: privately issued discount cards for low-income Americans, a reduced regulatory burden at the FDA and tort reform.

There are ways to reduce prescription drug prices without reducing the profits necessary to motivate investment in new medicines. Lawmakers in both Carson City and Washington, D.C., would serve us better if they focused on these options instead of soon-to-be nonexistent cheap drugs from Canada.

John R. Graham is director of health care studies at the California-based Pacific Research Institute. E-mail him at jgraham@pacificresearch.org.

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Earlier this month, the state Senate’s Commerce and Labor Committee debated a bill that would allow Canadian pharmacies to sell Nevadans prescription drugs. At first look, this seems to be a commendable attempt to reduce prescription drug costs, because Canadian brand-name drugs generally cost less than American ones. There are probably many Nevadans who already take advantage of the price differences and are ordering from pharmacies in Canada.

At least, they think they are ordering from Canadian pharmacies.

Because this business currently violates federal law, Nevadans who order from some so-called Canadian pharmacies have no way of knowing what they’re getting or where it’s coming from. If this bill becomes law, the state Board of Pharmacy will be able to license any Canadian-based Internet pharmacy, as long as the board in the relevant Canadian province has also licensed it. By checking a Web site set up by the state Department of Health, patients will easily learn whether a Canadian pharmacy is licensed or not.

So, is this an opportunity for the Silver State’s politicians to stand up to the pharmaceutical industry and give residents some relief from sky-high drug prices? Certainly not. In fact, this whole movement to get cheaper drugs from Canada is, at best, a distraction from serious health care reforms that will put patients’ interests first. It’s depressing that Nevada’s politicians are wasting the taxpayers’ time debating it.

Why? This month, the Canadian Health Minister, Ujjal Dosanjh, supported by the Canadian Pharmacists Association, the Canadian Medical Association and other groups, indicated that he would look at ways for the Canadian government to ban shipments of medicines through the Internet. As more states, and even the U.S. federal government, jawbone about making this trade legal, it only hastens the day when Canadians will shut it down.

The problem with this cross-border prescription traffic (which lawyers and economists call “parallel trade”) is that it has always been a win-lose situation and only sustainable for the short term. Some American patients and the Internet pharmacies win, but Canadian patients and drug companies lose. Many pharmaceutical companies are making Canadian wholesalers promise not to divert their medicines to Internet pharmacies that will ship the medicines to Americans.

It’s not easy to enforce such terms, so the pharmaceutical manufacturers have decided to restrict sales to Canadian pharmacies. Any unexplained jump in demand leads to warning lights going off in the manufacturers’ warehouses, and they stop shipping.

This is starting to cause a big problem for Canada. The Coalition for Manitoba Pharmacy, a group located in the province with the biggest concentration of Internet pharmacies, periodically reports shortages of certain medicines. Nobody can expect the Canadian government to stand by and let the Internet traders pillage the shelves of Canadian pharmacies.

Even if they were so sleepy as to allow this to happen, it wouldn’t be any good to American patients who demand medicines that often do not exist in Canada. Over the 10 years ending in 2001, the FDA approved 337 new medicines while the Canadian regulator approved 295.

What if Nevada or the United States decided to “parallel” import medicines from Ireland, Belgium, or Australia, for example? Obviously, the drug makers and the governments there would respond the same way. The problem with trying to lower prescription drug prices through parallel trade is that it relies on foreign governments and drug makers to act against their own interests, which they surely will not do.

The outrage over prescription drug prices in the United States is largely a political creation anyway. American seniors, the richest group in the history of mankind, spend 3 percent of their incomes on medicines, less than half of what they spend on entertainment. And for those truly in need, there are solutions: privately issued discount cards for low-income Americans, a reduced regulatory burden at the FDA and tort reform.

There are ways to reduce prescription drug prices without reducing the profits necessary to motivate investment in new medicines. Lawmakers in both Carson City and Washington, D.C., would serve us better if they focused on these options instead of soon-to-be nonexistent cheap drugs from Canada.

John R. Graham is director of health care studies at the California-based Pacific Research Institute. E-mail him at jgraham@pacificresearch.org.